One Person company, as the name suggest, it is owned and managed by a single person. As per the Companies Act, 2013 under Section 2(62) “One Person Company means a company which has only one member.”
Forming an One Person Company will provide businessmen much flexibility in management, attains benefits and status like Private Limited Company, which means they will have limited liability, legal protection for business, access to credits, bank loans, access to markets etc, all in the name of separate legal entity.
Previously in old companies act, 1956, to incorporate a company we need two persons. But, in this new concept too we require two persons to register One person company, one is Member cum Director and the other person would be a Nominee.
Small and medium enterprises, doing business as sole proprietors, might easily enter into the corporate domain through this One Person Company registration.
One Person Company needs to have one director. It can have maximum of 15 directors the sole proprietor of One Person Company can offer Directorship to his Associates by which he can expand his business without any threat to the ownership of the company.
Incorporating a One Person Company, helps to run the company as Private Limited Company and in case of death or disability of sole person, safeguard provided by appointing a Nominee for the company, who will take charge of affairs of the company till the date of transmission of shares to legal heirs of the demised member.
One Person Company makes it possible to ‘Own’ property, and ‘deal in’ the name of a company. For various reasons it sometimes suits persons to ‘own property in, or deal in’ the name of their company rather than in their own name.
Normally, formation of One Person Company is possible only by naturally born Indian, who is a resident of India, the advantages of an One Person company can only be obtained by those Indians who are naturally born and also a resident of India.